AMENDMENT T0 SUBSCRIPTION AGREEMENT
Exhibit
10.50
AMENDMENT
T0
The
Subscription Agreement made as of March 10, 2008 (the "Subscription
Agreement")
by and
among Modtech Holdings, Inc., a Delaware corporation (the “Company”),
and
the parties set forth on the signature pages affixed thereto (the “Buyers”)
is
hereby amended by this amendment made between the Company and the Buyers (the
"Amendment").
Capitalized terms used in this Amendment that are not defined herein shall
have
the meanings given them in the Subscription Agreement.
1. Notwithstanding
the provisions of the Certificate of Determination attached as Exhibit A to
the
Subscription Agreement, the Buyers shall not have the right to receive upon
conversion of the Series B Preferred Stock and Series C Preferred Stock (the
“Securities”)
shares
of common stock of the Company which in the aggregate exceed 19.99% of the
Company's common stock outstanding on March 10, 2008 or which would otherwise
exceed the number of shares of common stock that the Company may issue to the
Buyers in compliance with The Nasdaq Marketplace Rules (the "Conversion
Cap").
The
Conversion Cap will not apply if the Company obtains stockholder approval of
the
issuance of the common stock upon conversion of the Securities in excess of
the
Conversion Cap as required by the Nasdaq Marketplace Rules ("Stockholder
Approval").
2.
The
Company will use its best efforts to obtain Stockholder Approval at its next
annual meeting scheduled for June 17, 2008. If Stockholder Approval is not
obtained at the June 17, 2008 meeting, the Company will continue to use its
best
efforts to obtain stockholder approval during each calendar quarter thereafter
until Stockholder Approval is obtained or is no longer necessary.
3.
Until
Stockholder Approval is obtained or determined by the Company to no longer
be
necessary for the Buyers to be able to fully convert the Securities, no Buyer
will be issued upon conversion of their Securities shares of common stock in
an
amount greater than the product of the Conversion Cap multiplied by a fraction,
the numerator of which is the number of shares of Company common stock into
which the Securities held by such Buyer are convertible without regard to the
Conversion Cap and the denominator of which is the number of shares of Company
common stock into which all of the Securities issued to the Buyers and still
outstanding are convertible without regard to the Conversion Cap.
4. As
reflected in the Second Amended and Restated Certificate of Determination
attached hereto as Exhibit A, the Securities will have that number of votes
per
share equal to the number of shares of common stock into which the Securities
are convertible at their respective conversion prices on the date of issuance
of
the Securities (which equal or exceed the market price of the common shares
on
that date), excluding for the purpose of such calculation any dividends that
may
accrue or be paid on the Series B Preferred Stock. The Schedule of Buyers
attached to the Subscription Agreement is amended and restated by the attached
Schedule of Buyers to reflect an adjustment of 50 shares of Series C Preferred
Stock purchased by two Buyers.
1
5.
This
Amendment shall be binding on the parties hereto and their respective successors
and assigns.
6.
Except
as specifically amended hereby, the provisions of the Subscription Agreement
shall remain unaltered. This Amendment constitutes the entire agreement among
the parties hereto with respect to the subject matter hereof and may be amended
only by a writing executed by all parties. This Amendment shall be enforced,
governed and construed in all respects in accordance with the laws of the State
of California.
2
IN
WITNESS WHEREOF, the
Buyers and the Company have caused this Amendment to be duly executed effective
as of the date first above written.
| COMPANY: | ||
| Modtech Holdings, Inc. | ||
| |
|
|
| By: | /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ | |
| Name: |
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ |
|
| Title: | CEO | |
| BUYERS: | ||
| /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ | ||
|
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ |
||
| /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ | ||
|
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ |
||
| /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ | ||
|
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ |
||
| /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ | ||
|
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ |
||
| /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ | ||
|
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ |
||
| /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇ | ||
|
▇▇▇▇▇▇▇ ▇▇▇▇▇ |
||
| R & R Opportunity Fund | ||
| |
||
| By: | /s/ ▇▇▇▇ ▇. ▇▇▇▇▇, III | |
|
▇▇▇▇ ▇. ▇▇▇▇▇, III |
||
| Authorized Signatory | ||
3
IN
WITNESS WHEREOF,
the
Buyers and the Company have caused this Amendment to be duly executed effective
as of the date first written above.
| BUYERS: | ||
| /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ | ||
|
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ |
||
| /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ | ||
|
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ |
||
| /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇ | ||
|
▇▇▇▇▇▇ ▇▇▇▇▇▇ |
||
| /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ | ||
|
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ |
||
| /s/ ▇▇▇▇▇▇ ▇▇▇▇▇ | ||
|
▇▇▇▇▇▇ ▇▇▇▇▇ |
||
| /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ | ||
|
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ |
||
| /s/ ▇▇▇▇▇▇▇ Von Hor | ||
|
▇▇▇▇▇▇▇ Von Hor |
||
| /s/ ▇▇▇▇▇ ▇▇▇▇▇ | ||
|
▇▇▇▇▇ ▇▇▇▇▇ |
||
4
IN
WITNESS WHEREOF,
the
Buyers and the Company have caused this Amendment to be duly executed effective
as of the date first written above.
| BUYERS: | ||
| Dolphin Offshore Partners, L.P. | ||
| |
||
| By: | /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇ | |
|
▇▇▇▇▇ ▇. ▇▇▇▇▇ |
||
| General Partner | ||
| /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ | ||
|
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ |
||
| /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ | ||
|
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ |
||
| /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ | ||
|
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ |
||
| GCA Strategic Investment Fund Limited | ||
| By: | /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ | |
|
▇▇▇▇▇ ▇. ▇▇▇▇▇▇ |
||
| Authorized Signatory | ||
| Maythorpe Holdings Limited | ||
| By: | /s/ ▇▇▇▇ ▇▇▇▇▇▇ | |
|
▇▇▇▇ ▇▇▇▇▇▇ |
||
| Authorized Signatory | ||
| /s/ ▇▇▇▇▇ ▇▇▇▇, III | ||
|
▇▇▇▇▇ ▇▇▇▇, III |
||
5
SCHEDULE
OF BUYERS
|
Buyer’s
Name
|
Buyer’s
(Address
and
Facsimile Number
|
Number
of
Securities |
Purchase
Price
|
|
▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇
|
▇▇▇▇▇▇▇▇▇▇,
Wick & Co.
▇▇
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇
▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile
# (▇▇▇) ▇▇▇-▇▇▇▇
|
588
shares of Series C Preferred Stock
|
$58,800
|
|||
|
▇▇▇▇▇
▇▇▇▇
|
▇▇▇▇▇▇▇▇▇▇,
Wick & Co.
▇▇
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇
▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile
# (▇▇▇) ▇▇▇-▇▇▇▇
|
500
shares of Series C Preferred Stock
|
$50,000
|
|||
|
▇▇▇▇▇▇
▇▇▇▇▇▇▇▇
|
▇.
▇▇▇▇▇ & Co
▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile
# (▇▇▇) ▇▇▇-▇▇▇▇
|
10
shares of Series C Preferred Stock
|
$1,000
|
|||
|
▇▇▇▇▇▇▇
▇▇▇▇▇▇
|
▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile
# (▇▇▇) ▇▇▇-▇▇▇▇
|
500
shares of Series C Preferred Stock
|
$50,000
|
|||
|
▇▇▇▇▇▇
▇▇▇▇▇▇▇
|
Red
Rock Resorts
▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
Facsimile
# (▇▇▇) ▇▇▇-▇▇▇▇
|
100
shares of Series C Preferred Stock
|
$10,000
|
|||
|
▇▇▇▇▇▇
▇▇▇▇▇▇▇
|
Modtech
Holdings, Inc.
▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
Facsimile
# (▇▇▇) ▇▇▇-▇▇▇▇
|
200
shares of Series C Preferred Stock
|
$20,000
|
|||
|
▇▇▇▇▇▇▇
▇▇▇▇▇▇
|
Modtech
Holdings, Inc.
▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
Facsimile
# (▇▇▇) ▇▇▇-▇▇▇▇
|
10
shares of Series C Preferred Stock
|
$1,000
|
|||
|
▇▇▇▇▇▇
▇▇▇▇▇▇
|
Modtech
Holdings, Inc.
▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
Facsimile
# (▇▇▇) ▇▇▇-▇▇▇▇
|
10
shares of Series C Preferred Stock
|
$1,000
|
|||
|
▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇
|
Modtech
Holdings, Inc.
▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
Facsimile
# (▇▇▇) ▇▇▇-▇▇▇▇
|
100
shares of Series C Preferred Stock
|
$10,000
|
|||
|
▇▇▇▇▇
▇▇▇▇▇
|
Modtech
Holdings, Inc.
▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
Facsimile
# (▇▇▇) ▇▇▇-▇▇▇▇
|
50
shares of Series C Preferred Stock
|
$5,000
|
|||
|
▇▇▇▇▇
▇▇▇▇▇▇▇▇▇
|
Modtech
Holdings, Inc.
▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
Facsimile
# (▇▇▇) ▇▇▇-▇▇▇▇
|
50
shares of Series C Preferred Stock
|
$5,000
|
|||
|
▇▇▇▇▇▇▇
Von Hor
|
Modtech
Holdings, Inc.
▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
Facsimile
# (▇▇▇) ▇▇▇-▇▇▇▇
|
18
shares of Series C Preferred Stock
|
$1,800
|
|||
|
▇▇▇▇▇▇
▇▇▇▇▇▇▇▇
|
Modtech
Holdings, Inc.
▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇.
▇▇▇▇▇
▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile
# ▇▇▇-▇▇▇-▇▇▇▇
|
50
shares of Series C Preferred Stock
|
$5,000
|
1
|
Buyer’s
Name
|
Buyer’s
(Address
and
Facsimile Number
|
Number
of
Securities |
Purchase
Price
|
|
▇▇▇▇▇▇▇
▇▇▇▇▇
|
Modtech
Holdings, Inc.
▇▇▇▇
▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
Facsimile
# ▇▇▇-▇▇▇-▇▇▇▇
|
10
shares of Series C Preferred Stock
|
$1,000
|
|||
|
▇▇▇▇▇
▇▇▇▇▇
|
Modtech
Holdings, Inc.
▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
Facsimile
#▇▇▇-▇▇▇-▇▇▇▇
|
10
shares of Series C Preferred Stock
|
$1,000
|
|||
|
R&R
Opportunity Fund
|
R&R
Opp. Fund - care of Noari Holdings LLC
▇
▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇
#▇▇▇
▇▇▇▇▇▇▇▇▇,
▇.▇. ▇▇▇▇▇
|
2000
shares of Series B Preferred Stock
|
$200,000
|
|||
|
▇▇▇▇▇
▇▇▇▇▇, General Partner Dolphin Offshore Partners, L.P.
|
▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇
▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile
# (▇▇▇) ▇▇▇-▇▇▇▇
|
7,500
shares of Series B Preferred Stock
|
$750,000
|
|||
|
▇▇▇▇▇▇
▇▇▇▇▇▇▇
|
▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇,
▇▇▇▇ ▇▇▇▇▇
|
960
shares of Series B Preferred Stock
|
$96,000
|
|||
|
▇▇▇▇▇▇▇
▇. ▇▇▇▇▇
|
The
▇▇▇▇▇ Company
▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇,
▇▇▇▇ ▇▇▇▇▇
Facsimile
# (▇▇▇) ▇▇▇-▇▇▇▇
|
480
shares of Series B Preferred Stock
|
$48,000
|
|||
|
▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇
|
KRG
Capital Partners, LLC
▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Tower
One - Suite 1500
▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
Facsimile
# (▇▇▇) ▇▇▇-▇▇▇▇
|
1250
shares of Series B Preferred Stock
|
$125,000
|
|||
|
GCA
Strategic Investment Fund Limited
|
▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇▇
|
▇▇▇▇
shares of Series B Preferred Stock
|
$100,000
|
|||
|
Maythorpe
Holdings Limited
|
▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
333
Waterfront Drive
Road
Town, Tortola, British Virgin Islands
Facsimile
#. (▇▇▇) ▇▇▇-▇▇▇▇
|
1000
shares of Series B Preferred Stock
|
$100,000
|
2
Exhibit
A
SECOND
AMENDED AND RESTATED
CERTIFICATE
OF DESIGNATION OF
PREFERENCES,
RELATIVE, PARTICIPATING, OPTIONAL, AND OTHER SPECIAL
RIGHTS,
QUALIFICATIONS, LIMITATIONS AND RESTRICTIONS
OF
SERIES
B
PREFERRED STOCK
AND
SERIES C PREFERRED STOCK
OF
MODTECH
HOLDINGS, INC.
The
undersigned, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, certify that:
ONE.
They
are
the duly elected Chief Executive Officer and Secretary, respectively, of the
above-named corporation.
TWO.
Pursuant
to and in accordance with the provisions of Section 151 of the Delaware General
Corporation Law and the Certificate of Incorporation of this corporation, the
Board of Directors of this corporation has duly adopted the following recitals
and resolutions.
WHEREAS,
the Certificate of Incorporation of this corporation provides for a class of
its
authorized shares known as Preferred Stock comprised of 5,000,000 shares
issuable from time to time in one or more series; and
WHEREAS,
the Board of Directors of this corporation is authorized to fix the number
of
shares of any series of Preferred Stock and to determine the designation of
any
such series and the rights, preferences, privileges and restrictions granted
to
or imposed upon any wholly unissued series of Preferred Stock; and
WHEREAS,
the Board of Directors has previously fixed and determined the designation
of,
the number of shares constituting, and the rights, preferences, privileges
and
restrictions relating to a Series A Preferred Stock; and
WHEREAS,
pursuant to a Certificate of Designation filed with the Delaware Secretary
of
State on March 11, 2008, the Board of Directors of this corporation has
previously established two additional classes of Preferred
Stock , one designated as the "Series
B
Preferred Stock" and the other designated as “Series C Preferred
Stock,”
and
fixed the
number of shares in each class
and the
rights, preferences, privileges, restrictions and other matters
relating
thereto; and
WHEREAS,
the Board of Directors wishes to amend and restate the Certificate of
Designation filed March 11, 2008 in its entirety;
NOW,
THER.EFORE, BE IT RESOLVED, that a series consisting of
50,000
shares of Preferred
Stock, $0.01 par value per share, is hereby established and designated
as the
"Series B Preferred Stock" of this corporation
(the "Series
B Preferred Stock"),
and
that the Series B Preferred Stock shall have the rights, preferences and
privileges, and shall be subject to the restrictions, as are hereinafter set
forth; and
1
RESOLVED
FURTHER, that
a
series consisting of
50,000
shares of Preferred
Stock, $0.01 par value per share, is hereby established and designated
as the
"Series C Preferred Stock" of this corporation
(the "Series
C Preferred Stock"),
and
that the Series C Preferred Stock shall have the rights, preferences and
privileges, and shall be subject to the restrictions, as are hereinafter set
forth:
1. Dividend
Provisions.
(a) Series
B Dividends.
The
holders of outstanding Series B Preferred Stock shall be entitled to receive
when, as and if declared by the Board of Directors, out of unissued shares
of
Series B Preferred Stock at the time legally available therefor, dividends,
in
whole and/or fractional shares of such Series B Preferred Stock, at the rate
of
Eight Percent (8%) per share of outstanding Series B Preferred Stock per annum.
Dividends shall accrue on each share of Series B Preferred Stock from the date
of its original issuance and shall accrue from day to day, whether or not earned
or declared. Such dividends shall be cumulative so that if such dividends in
respect of any previous year at said rate per share per annum shall not have
been paid or declared and set apart for all shares of Series B Preferred Stock
at the time outstanding, the deficiency shall be fully paid on or declared
and
set apart for such shares before this corporation pays any dividend (except
a
dividend in shares of Common Stock) on Common Stock or any dividend on Series
C
Preferred Stock or on any Preferred Stock issued subsequent to the Series B
Preferred Stock. Undeclared or unpaid dividends shall not bear or accrue
interest.
(b) Series
C Dividends.
No
dividend shall be declared or paid on the Common Stock of this corporation
(other than in Common Stock of this corporation) or on any other series of
Preferred Stock, except Series B Preferred Stock as provided above, unless
prior
to and in preference thereof a dividend of equal amount per share is declared
and paid on the outstanding shares of the Series C Preferred Stock out of any
assets legally available therefore. Unless and until declared, no dividends
shall accrue on outstanding shares of Series C Preferred Stock.
2. Liquidation
Preference.
(a) Series
B Liquidation Preference.
In the
event of any voluntary or involuntary liquidation, dissolution or winding up
of
this corporation, the holders of each then outstanding share of Series B
Preferred Stock shall be entitled to receive, prior and in preference to any
distribution of the assets or surplus funds of this corporation to the holders
of Common Stock, Series C Preferred Stock, or any series of Preferred Stock
issued subsequent to the Series B Preferred Stock, an amount equal to One
Hundred Dollars ($100.00) per share, (appropriately adjusted to reflect stock
splits, stock dividends, reorganizations, consolidations and similar changes
with respect to the Series B Preferred Stock occurring after the date of
the first issuance of shares of the Series B Preferred Stock), plus all accrued
but unpaid cumulative dividends on such share of Series B Preferred Stock (the
"Series
B Liquidation Preference").
The
Series B Liquidation Preference shall be paid or set apart for payment before,
in connection with any liquidation, dissolution or winding up of the
corporation, the payment or setting apart for payment of any amount for, or
the
distribution of any assets of this corporation to, the holders of Series C
Preferred Stock, Common Stock or any series of Preferred Stock issued subsequent
to the Series B Preferred Stock. If the assets or surplus funds to be
distributed to the holders of the Series B Preferred Stock are insufficient
to
permit the payment to such holders of the full Series B Liquidation Preference,
then the entire assets and surplus funds of this corporation legally available
for distribution shall be distributed ratably among the holders of the Series
B
Preferred Stock in proportion to the share of the Series B Liquidation
Preference each such holder is otherwise entitled to receive in respect of
the
shares of Series B Preferred Stock then held by such holder.
2
(b)
Series
C Liquidation Preference.
In the
event of any voluntary or involuntary liquidation, dissolution or winding up
of
this corporation and after the payment or setting apart for payment of the
Series B Liquidation Preference, the holders of each then outstanding share
of
Series C Preferred Stock shall be entitled to receive, by reason of their
ownership thereof, prior and in preference to any distribution of any of the
assets of this corporation to the holders of the Common Stock or any series
of
Preferred Stock issued subsequent to the Series C Preferred Stock an amount
equal to One Hundred Dollars ($100.00) per share (appropriately adjusted to
reflect stock splits, stock dividends, reorganizations, consolidations and
similar changes with respect to the Series C Preferred Stock occurring
after the date of the first issuance of shares of the Series C Preferred Stock),
plus any declared but unpaid dividends on such share of Series C Preferred
Stock
(the "Series
C Liquidation Preference").
The
Series C Liquidation Preference shall be paid or set apart for payment before,
in connection with any liquidation, dissolution or winding up of the
corporation, the payment or setting apart for payment of any amount for, or
the
distribution of any assets of this corporation to, the holders of Common Stock
or any series of Preferred Stock issued subsequent to the Series C Preferred
Stock. If the remaining assets or surplus funds to be distributed to the holders
of the Series C Preferred Stock are insufficient to permit the payment to such
holders of the full Series C Liquidation Preference, then the entire remaining
assets and surplus funds of this corporation legally available for distribution
shall be distributed ratably among the holders of the Series C Preferred Stock
in proportion to the share of the Series C Liquidation Preference each such
holder is otherwise entitled to receive in respect of the shares of Series
C
Preferred Stock then held by such holder.
(c) Remaining
Assets.
After
the payment or setting apart for payment in full of the Series B Liquidation
Preference and the Series C Liquidation Preference, any remaining assets or
surplus funds of this corporation shall be distributed to the holders of Series
B Preferred Stock, the holders of Series C Preferred Stock and the holders
of
Common Stock, ratably on the basis of the number of shares of Common Stock
then
held by them and then issuable upon conversion of the Series B Preferred Stock
and Series C Preferred Stock then held by them.
3
3. Redemption.
(a) Optional.
Following the twentieth (20th)
consecutive trading day on which the closing price of the Common Stock (or
the
closing bid price if there is no closing price) equals or exceeds Two Dollars
($2.00) per share on the exchange or market on which the Common Stock is then
traded, this corporation may at any time thereafter to the extent it may
lawfully do so, at the option of its Board of Directors, redeem in whole or
in
part (i) the Series B Preferred Stock by paying in cash therefor a sum equal
to
One Hundred Dollars ($100.00) per share of Series B Preferred Stock
(appropriately adjusted to reflect stock splits, stock dividends,
reorganizations, consolidations and similar changes with respect to the
Series B Preferred Stock occurring after the date of the first issuance of
shares of Series B Preferred), together with all accrued but unpaid dividends
on
such shares to the date of redemption (the "Series
B Redemption Price")
and
(ii) the Series C Preferred Stock by paying in cash therefor a sum equal to
One
Hundred Dollars ($100.00) per share of Series C Preferred Stock (appropriately
adjusted to reflect stock splits, stock dividends, reorganizations,
consolidations and similar changes with respect to the Series C Preferred Stock
occurring after the date of the first issuance of shares of Series C Preferred
Stock), together with all declared but unpaid dividends on such shares to the
date of redemption (the "Series
C Redemption Price").
Any
redemption of Series B Preferred Stock and Series C Preferred Stock shall be
pro
rata among the outstanding shares of Series B Preferred Stock and Series C
Preferred Stock based upon the number of shares held by each holder thereof.
(b) Notice
of Redemption.
The
corporation shall give written notice at least thirty (30) days prior to the
redemption date, of its intention to redeem the Series B Preferred Stock
and Series C Preferred Stock as provided herein, to each holder thereof, such
notice to be addressed to each holder at the address of such holder as it
appears on the stock transfer books of the corporation and to specify (i) the
total number of shares of Series B Preferred Stock and Series C Preferred
Stock being redeemed; (ii) the number of shares of Series B Preferred
Stock and Series C Preferred Stock held by the holder which the corporation
intends to redeem; (iii) the date of redemption, the Series B Redemption
Price and the Series C Redemption Price; and (iv) the date on which the
conversion rights with respect to such shares terminate in accordance with
Section 4 below. On or after the date of redemption, each holder of
Series B Preferred Stock and Series C Preferred Stock shall surrender his
certificate for the number of shares to be redeemed as stated in the notice
provided by the corporation (other than those shares properly converted pursuant
to Section 4 below). If less than all the shares represented by such
certificates are to be redeemed, the corporation shall forthwith issue a new
certificate for the unredeemed shares.
4
4. Conversion.
The
holders of the Series B Preferred Stock and Series C Preferred Stock shall
have
conversion rights as follows:
(a) Optional
Conversion into Common Stock.
Each
share of Series B Preferred Stock and Series C Preferred Stock shall be
convertible at the option of the holder thereof, at any time after the date
of
issuance of such share and on or prior to the fifth day prior to the redemption
date for such share fixed by a redemption notice in accordance with
Section 3 above, at the office of the corporation or any transfer agent for
such stock, into such number of fully paid and nonassessable shares of Common
Stock as is determined by, in the case of Series B Preferred Stock, dividing
One
Hundred Dollars ($100.00), plus accrued but unpaid dividends on the Series
B
Preferred Stock by the "Series
B Conversion Price"
in
effect at the time and, in the case of Series C Preferred Stock, dividing One
Hundred Dollars ($100.00), plus declared but unpaid dividends on the Series
C
Preferred Stock by the "Series
C Conversion Price"
in
effect at the time. The initial Series B Conversion Price per share is Forty
Cents ($0.40) and the initial Series C Conversion Price per share is Forty-Nine
Cents ($0.49); provided, however, that the Series B Conversion Price and the
Series C Conversion Price shall be subject to adjustment as set forth in
subsection 4(c).
(b)
Mechanics
of Conversion from Preferred Stock to Common Stock.
No
fractional shares of Common Stock shall be issued upon conversion of Series
B
Preferred Stock or Series C Preferred Stock. In lieu of any fractional shares
to
which the holder would otherwise be entitled, the corporation shall pay cash
equal to such fraction multiplied by the then effective Series B Conversion
Price or Series C Conversion Price, as applicable. Before any holder of Series
B
Preferred Stock or Series C Preferred Stock shall be entitled to convert the
same into shares of Common Stock pursuant to Section 4(a) hereof, he shall
surrender the certificate or certificates therefor, duly endorsed, at the office
of the corporation or of any transfer agent for the Series B Preferred Stock
or
Series C Preferred Stock, and shall give written notice to the corporation
at
such office that he elects to convert the same and shall state therein his
name
or the name or names of his nominees in which he wishes the certificate or
certificates for shares of Common Stock to be issued. The corporation shall,
as
soon as practicable thereafter, issue and deliver at such office to such holder
of Series B Preferred Stock or Series C Preferred Stock, or to his nominee
or
nominees, a certificate or certificates for the number of shares of Common
Stock
to which he shall be entitled as aforesaid, together with cash in lieu of any
fraction of a share. Such conversion shall be deemed to have been made
immediately prior to the close of business on the date of such surrender of
the
shares of Preferred Stock to be converted, and the person or persons entitled
to
receive the shares of Common Stock issuable upon conversion shall be treated
for
all purposes as the record holder or holders of such shares of Common Stock
on
such date.
(c) Adjustment
in Conversion Price.
(i) Combinations
or Subdivisions.
If the
corporation at any time or from time to time after the date of the first
issuance of shares of the Series B Preferred Stock and Series C Preferred Stock
( the “Original
Issue Date”)
declares or pays any dividend on its Common Stock payable in Common Stock or
in
any right to acquire Common Stock, or effects a subdivision of the outstanding
shares of Common Stock into a greater number of shares of Common Stock (by
stock
split, reclassification or otherwise), or if the outstanding shares of Common
Stock is combined or consolidated, by reclassification or otherwise, into a
lesser number of shares of Common Stock, then the Series B Conversion Price
and
Series C Conversion Price in effect immediately prior to such event shall,
concurrently with the effectiveness of such event, be proportionately decreased
or increased, as appropriate.
5
(ii)
Reorganization;
Recapitalization.
If at
any time or from time to time there shall be a reclassification or
recapitalization of the capital stock of the corporation (other than a
subdivision, reclassification, stock split or combination provided for elsewhere
in this Section 4), any consolidation, merger, or reorganization of the
corporation with or into another entity or entities, or the conveyance of all
or
substantially all of the assets of the corporation to another entity, each
share
of Series B Preferred Stock and Series C Preferred Stock shall thereafter be
convertible into the number of shares of stock or other securities or property
(including cash) to which to which a holder of the number of shares of Common
Stock deliverable upon conversion of such shares would have been entitled on
such reclassification, recapitalization, consolidation, merger, reorganization
or conveyance. In any such case, appropriate adjustment shall be made in the
application of the provisions of this Section 4 with respect to the rights
of
the holders of the Series B Preferred Stock and Series C Preferred Stock after
the reclassification, recapitalization, consolidation, merger, reorganization
or
conveyance to the end that the provisions of this Section 4 (including
adjustment of the Series B Conversion Price and Series C Conversion Price then
in effect and the number of shares to be issued upon conversion of the Series
B
Preferred Stock and Series C Preferred Stock) shall be applicable after that
event as nearly equivalent as may be practicable.
(iii) Issuance
of Additional Securities; Other Adjustments.
Except
as otherwise provided in this Section 4(c), the Series B Conversion Price and
the Series C Conversion Price will not be adjusted upward or downward because
of
the issuance of additional securities after the Original Issue
Date.
(d) No
Impairment. This
corporation will not, by amendment of its Certificate of
Incorporation, or through reorganization, recapitalization, transfer of assets,
consolidation,
merger, dissolution, issue or sale of securities or any other voluntary action,
avoid or seek to avoid
the
observance
or performance of any of the terms to be
observed or performed hereunder by this corporation,
but will at all times in good faith assist in the carrying out of all the
provisions of this Section
4
and in the taking of all such action
as
may be necessary or appropriate in order to protect the conversion rights of
the
holders of the Series B Preferred
Stock and Series C Stock, respectively, against impairment.
(e) Certificate
as to Adjustments
Upon the
occurrence of each adjustment or readjustment
of the Series B Conversion Price and Series C Conversion Price pursuant to
this
Section 4, this corporation,
at its expense, shall promptly compute such adjustment
or readjustment in accordance with
the
terms hereof and prepare and furnish to each holder of Series B Preferred Stock
and each holder of Series C Preferred Stock a certificate setting
forth such adjustment or readjustment and showing in detail the facts upon
which
such adjustment
or readjustment is based. This corporation shall, upon the written request
at
any time of any holder of Series B Preferred Stock or Series C Preferred Stock,
furnish or cause to be furnished to such holder a like certificate setting
forth
(a) such adjustment and readjustment, (b) the conversion price for such series
of Preferred Stock at the time in effect, and (c) the number of shares of Common
Stock and the amount, if any, of other property which at the time would be
received upon the conversion of a share of Series B Preferred Stock and Series
C
Preferred Stock.
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(f)
Reservation
of Stock Issuable Upon Conversion.
This
corporation shall
at
all times reserve and keep available out of its authorized but unissued shares
of Common Stock, solely for the purpose of effecting the conversion of the
shares of the Series B Preferred Stock and Series C Preferred Stock, such number
of its shares of Common Stock as shall from time to time be sufficient to effect
the conversion of all then outstanding shares of the Series B Preferred Stock
and Series C Preferred Stock.
(g)
Notices.
Any
notice required by the provisions of this Section 4 to be given to the holders
of shares of Series B Preferred Stock or Series C Preferred Stock shall be
deemed given if deposited in the United States mail, postage prepaid, and
addressed to each holder of record at his address appearing on the books and
the
shares of this corporation.
5.
Voting Rights.
Except
as otherwise required by law and the provisions of this Section 5, the
holders of Series B Preferred Stock and Series C Preferred Stock shall be
entitled to notice of any stockholders' meeting in accordance with the Bylaws
of
the Corporation and to vote together with the holders of Common Stock as a
single class of capital stock upon any matter submitted to stockholders for
a
vote. Holders of Series B Preferred Stock and Series C Preferred Stock
shall have that number of votes per share equal to the number of shares of
Common Stock into which each such share of each such series of Preferred Stock
held by such holder, excluding any dividends accrued or paid on the Series
B
Preferred Stock, is convertible into at the record date for the determination
of
the stockholders entitled to vote on such matters or, if no such record date
is
established, at the date such vote is taken or any written consent of
stockholders is solicited. Fractional votes shall not, however, be permitted
and
any fractional voting rights resulting from the foregoing formula (after
aggregating all shares into which shares of Series B Preferred Stock and Series
C Preferred Stock held by each holder could be converted) shall be rounded
to
the nearest whole number (with one-half being rounded upward).
6.
Protective
Provisions.
So long
as at least 75% of the aggregate number of shares of Series B Preferred Stock
and Series C Preferred Stock issued on the Original Issue Date (appropriately
adjusted to reflect stock splits, stock dividends, reorganizations,
consolidations and similar changes with respect to the Series B Preferred Stock
and the Series C Preferred Stock occurring after the Original Issue Date),
are
outstanding, the corporation shall not, without the vote or written consent
by
the holders of at least a majority of the aggregate number of outstanding shares
of Series B Preferred Stock and Series C Preferred Stock authorize or issue,
or
obligate itself to issue, any other equity security senior to the Series B
Preferred Stock or Series C Preferred Stock as to dividend or redemption rights,
liquidation preferences, conversion rights, voting rights or otherwise, or
create any obligation or security convertible into or exchangeable for, or
having any option rights to purchase, any such equity security which is senior
to the Series B Preferred Stock or Series C Preferred Stock.
7
7. Status
of Converted Stock.
In the
event any shares of Series B Preferred
Stock or Series C Preferred Stock shall be converted pursuant to Section 4
hereof, the shares so converted shall be cancelled and shall not be reissuable
by the corporation, but shall be returned to the status of undesignated shares
of Preferred Stock.
IN
WITNESS WHEREOF, the undersigned have executed this certificate. Each of the
undersigned declares under penalty of perjury that the matters set forth in
the
foregoing certificate are true of his own knowledge. Executed at Riverside,
California effective April ___, 2008.
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